Mumbai: The proposed merger between Bangalore-based listed hospital chain Aster DM Healthcare and Hyderabad-based Quality CARE India is in its final stages of negotiations, and the deal is expected to be signed by the end of this month, investment banking sources told ET.
The likely swap ratio in the new merged entity is expected to be 55% for Aster DM and 45% for Quality CARE.
The merger will proceed through a share swap via a scheme of amalgamation approved by the National Company Law Tribunal (NCLT) but without triggering an open offer, said the bankers.
Upon completion, the merged entity, which will remain listed, will be renamed Aster DM Quality CARE. It will continue to have the backing of Aster's promoters, along with two private equity funds-Blackstone and TPG.
Blackstone will likely hold about 34% and TPG 11%, while the Moopen family, which holds a 42% stake in Aster DM, will hold around 23% in the combined entity.
Despite the two PE firms-Blackstone and TPG-holding a majority stake in the merged hospital chain, they will not have additional control or veto rights, preserving parity with the Aster DM promoter group, said sources.
The merged entity is set to become the second-largest listed hospital chain in India, with a projected capacity of around 10,000 beds across 38 hospitals by the end of FY25. Quality CARE currently owns Care Hospitals and KIMS Kerala Hospitals.
Aster DM shares have gained 17.55% in the last three months compared to the Nifty's 8.15% gain, and currently have a market capitalisation of ₹21,030 crore.
Bankers estimate the combined market capitalisation of both hospital chains to be around ₹40,000 crore.
The combined market value will be allocated with Aster DM comprising approximately 55% and Quality CARE making up the remaining 45%. Aster DM is currently valued at 32 times its FY2024 EV/EBITDA. Care Hospitals' FY24 EBITDA margin of 20% exceeds Aster DM's 16%.
According to the negotiated terms, both entities will have equal board representation with Aster DM's promoter Azad Moopen continuing as the executive chairperson of the merged entity.
Last year, Blackstone acquired a majority stake in Care Hospitals from Evercare, a platform of TPG RISE funds. Later, it also signed an agreement to acquire a majority stake in KIMS Health. Blackstone paid around $1 billion for the two transactions, with TPG retaining a significant minority stake in the combined platform.
Care Hospitals primarily operates in tier-2 cities and has expanded through both organic growth and acquisitions. It acquired Aurangabad's United CIIGMA Hospital in 2022 through its subsidiary Quality CARE India.
The likely swap ratio in the new merged entity is expected to be 55% for Aster DM and 45% for Quality CARE.
The merger will proceed through a share swap via a scheme of amalgamation approved by the National Company Law Tribunal (NCLT) but without triggering an open offer, said the bankers.
Upon completion, the merged entity, which will remain listed, will be renamed Aster DM Quality CARE. It will continue to have the backing of Aster's promoters, along with two private equity funds-Blackstone and TPG.
Blackstone will likely hold about 34% and TPG 11%, while the Moopen family, which holds a 42% stake in Aster DM, will hold around 23% in the combined entity.
Despite the two PE firms-Blackstone and TPG-holding a majority stake in the merged hospital chain, they will not have additional control or veto rights, preserving parity with the Aster DM promoter group, said sources.
The merged entity is set to become the second-largest listed hospital chain in India, with a projected capacity of around 10,000 beds across 38 hospitals by the end of FY25. Quality CARE currently owns Care Hospitals and KIMS Kerala Hospitals.
Aster DM shares have gained 17.55% in the last three months compared to the Nifty's 8.15% gain, and currently have a market capitalisation of ₹21,030 crore.
Bankers estimate the combined market capitalisation of both hospital chains to be around ₹40,000 crore.
The combined market value will be allocated with Aster DM comprising approximately 55% and Quality CARE making up the remaining 45%. Aster DM is currently valued at 32 times its FY2024 EV/EBITDA. Care Hospitals' FY24 EBITDA margin of 20% exceeds Aster DM's 16%.
According to the negotiated terms, both entities will have equal board representation with Aster DM's promoter Azad Moopen continuing as the executive chairperson of the merged entity.
Last year, Blackstone acquired a majority stake in Care Hospitals from Evercare, a platform of TPG RISE funds. Later, it also signed an agreement to acquire a majority stake in KIMS Health. Blackstone paid around $1 billion for the two transactions, with TPG retaining a significant minority stake in the combined platform.
Care Hospitals primarily operates in tier-2 cities and has expanded through both organic growth and acquisitions. It acquired Aurangabad's United CIIGMA Hospital in 2022 through its subsidiary Quality CARE India.
